Should HR Consider Adding ‘Company Values’ as Formal Evaluation Criteria in Employee Reviews?

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Core Values Road SignReviews, evaluations, assessments, appraisals – whatever terminology your company uses to describe its formal employee performance management process, the focus has always been gauging an employee’s ability to meet or exceed company goals and demonstrate competence in their role. But what about company values? Don’t they deserve some weight in the process too?

Companies spend a lot of time chiseling out a set of core values. These values set the tone and define the actions and motivations that ‘fit’ within the atmosphere the company is trying to create. Strong company values govern workplace culture, and yet it is rare to see managers and employees held accountable or rewarded for committing to company core values like respect, innovation, or transparent communication in the same way they are for contributing to company goals like profitability, growth, retention, etc.

Let’s back up for a moment to understand the link between company values and company success.

Research has shown time and again that companies with strong corporate values that encourage innovation, flexibility, and performance are more than three times as likely to realize strong financial results and higher levels of employee engagement and retention than companies that do not set or encourage that culture. Impressive for sure.

On a more practical level, imagine an employee who is a whiz at their job – a star performer and ace in their role. They have all of the skills needed to perform their tasks and meet their performance goals; however, that employee disrespects colleagues, does not participate in team settings and takes no initiative – all of which negates the company’s core commitment to honoring respect, innovation, and collaboration. In this case, if pay and opportunity were tied to performance, what could their manager do? Technically, the employee met their goals. And approaching a star performer with unexpected critique on softer, less structured attributes might demotivate them or create tension.

So how can you ensure that company values remain potent and alive long after they are formalized and communicated? How can companies go beyond evaluating individual competencies and skills towards assessing employees on their fit with strong and consistent corporate values? And more importantly, how can you ensure employees are completely aware of their expectations when it comes to perpetuating these core values?

We met up with a few customers who have decided that company values are too important to set and forget and thus have made the decision to embed company values directly into their formal employee performance management system. So simple and yet so brilliant.

This model allows organizations to evaluate employees on goals as well as company values – so that a portion of employee ratings are tied directly to their demonstrated execution of company values. With this model, employees have a formal expectation to tie company values into their internal and external day-to-day activities and are fully aware of the rewards and/or repercussions. Going back to our example, a manager would have no trouble discussing shortfalls with a star performer as the expectations would have already been made clear at the beginning of the review period.

Now, this might not be an ideal model for any organization, and making the decision to introduce values as an evaluation area would require a few considerations.

1. What weight should values hold in appraisals relative to goals and competencies?

We recommend starting with a weight of 15%-25% for values. That way, performance and tangible goals are still the focus but employees are aware that a good portion of their final reward will be tied to how seriously they demonstrate a commitment to company values.

2. How will the display of values be ‘quantified’ and proven?

This might be challenging at first as values often represent softer skills that are difficult to justify; however, we find that the use of 360° peer feedback as well as accomplishment tracking can go a long way toward helping managers and employees validate these ratings.

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emPerform Values

So if you are looking for a way to not only solidify company values but ensure they are being perpetuated consistently throughout the organization, consider adding them as formal evaluation criteria in your company’s performance reviews.

For more information on how CRG emPerform’s online review platform can help, contact us.